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Indus Motor Company

Analysis of Financial Statement

Submitted To:
Sir Shuja Ali

Submitted By:
Sameer Tariq (090032)

Air University, Islamabad


1

Company Information:
Company Registration Number:
0020742

National Tax Number:


0676546 7

Status of the Company:


Listed On:
Karachi Stock Exchange (Guarantee) Ltd
Lahore Stock Exchange (Guarantee) Ltd
Islamabad Stock Exchange (Guarantee) Ltd
Symbol:
INDU

Details of Permissible Business Activities:


Manufacturers, assemblers, distributors and importers of Toyota and Daihatsu vehicles,
spare parts and accessories in Pakistan.

Bankers:
Askari Bank Limited
Bank Alfalah Limited
Barclays Bank PLC Pakistan
Bank Al-Habib Limited
Citibank N.A.
Habib Bank Limited
Habib Metropolitan Bank Limited
HSBC Bank Middle East Limited
MCB Bank Limited
National Bank of Pakistan
NIB Bank Limited
2

Soneri Bank Limited


Standard Chartered Bank (Pakistan) Limited
The Bank of Tokyo-Mitsubishi UFJ, Limited
United Bank Limited

Auditors:
A.F. Ferguson & Co.
Chartered Accountants
State Life Building No. 1-C,
I.I. Chundrigar Road,
Karachi.

Legal Advisors:
A.K. Brohi & Company
Mansoor Ahmed Khan & Co.
Mahmud & Co.
Sayeed & Sayeed Co.

Share Registrar:
Noble Computer Services (Pvt.) Ltd.,
First Floor, House of Habib Building,
(Siddiqsons Tower), 3 Jinnah Cooperative Housing Society,
Main Shahrah-e-Faisal
Karachi-75350.
PABX: (92-21) 34325482-87, Fax (92-21) 34325442
Email: ncsl@noble-computers.com
Address of Head Office / Registered Office / Factory
Plot No. N.W.Z/1/P-1, Port Qasim Authority,
Bin Qasim, Karachi.
Phone: (PABX) (92-21) 34720041-48
(UAN) (92-21) 111-TOYOTA (869-682)
Fax: (92-21) 34720056
Email: customer.relations@toyota-indus.com

Memberships:
Pakistan Automotive Manufacturers Association (PAMA)
The Overseas Investors Chamber of Commerce & Industry (OICCI)
Karachi Chamber of Commerce & Industry (KCCI)
Pakistan Business Council (PBC)

Associated Companies:
Toyota Motor Corporation, Japan
Toyota Tsusho Corporation, Japan
Thal Limited
Habib Insurance Co. Limited
Shabbir Tiles & Ceramics Ltd.
Makro-Habib Pakistan Ltd.
Habib Metropolitan Bank Limited

Vision and Mission Statements:


Vision Statement:
To be the most respectable and successful enterprise, delighting customers with a wide
range of products and solutions in automobile industry with the best people and the best
technology.

Mission Statement:
IMCs Mission is reflected in our Companys Slogan
ACT # 1
Action, Commitment and Teamwork to become #1 in Pakistan.
The Indus Team is committed to ACT so that it achieves the #1 position in the auto industry
in:
Respect and Corporate Image
Customer Satisfaction
Profitability
Quality and Safety
Production and Sale
Best Employer

History:
Indus Motor Company (IMC) is a joint venture between the House of Habib , Toyota Motor
Corporation Japan (TMC) , and Toyota Tsusho Corporation Japan (TTC) for assembling,
progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01,
1990. IMC is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd.
vehicles in Pakistan through its dealership network.
The company was incorporated in Pakistan as a public limited company in December 1989
and started commercial production in May 1993. The shares of company are quoted on the
stock exchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho Corporation
have 25 % stake in the company equity. The majority shareholder is the House of Habib.
IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an
area measuring over 105 acres.
Indus Motor Companys plant is the only manufacturing site in the world where both
Toyota and Daihatsu brands are being manufactured.
Heavy investment was made to build its production facilities based on state of art
technologies. To ensure highest level of productivity world-renowned Toyota Production
Systems are implemented.
IMC's Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota Hilux
Single Cabin 4x2 and 4 versions of Daihatsu Cuore. We also have a wide range of imported
vehicles.

Collaboration:

EQUITY

Toyota Motor Corporation

Toyota Tsusho Corporation

House of Habib

BUSINESS
TOYOTA GROUP

Technology & KD Parts

Materials, Parts & Logistics Support

Technology KD Parts

Hilux Frame & Deck

Core Values:
These are the core values of Indus Motor Company Limited:

World class production quality


Achieving the ultimate goal of complete customer satisfaction
Being seen as the best employer
Fostering the spirit of teamwork
Inculcating ethical and honest practices

Strategic Objectives:
Achieving market leadership by delivering value to customers:
Following our Customer First philosophy in manufacturing and providing high
quality vehicles and services that meet the needs of Pakistani customers.
Enhancing the quality and reach of our 3S Dealership Network.
Employing customers insight and feedback for continuous corporate renewal,
including product development, improving service and customer care.

Bringing Toyota Quality to Pakistan


Maximizing QRD (Quality, Reliability and Durability) by built-in engineering.
Transferring technology and promoting indigenization at IMC and its Vendors.
Raising the bar in all support functions to meet Toyota Global Standards.

Optimizing cost by Kaizen


Fostering a Kaizen culture and mindset at IMC, its Dealers and Vendors.
Implementing Toyota Production System.
Removing waste in all areas and operating in the lowest cost quartile of the
industry.

Respecting our people


Treating employees as the most important sustainable competitive resource.
Providing a continuous learning environment that promotes individual creativity
and teamwork.

Supporting equal employment opportunities, diversity and inclusions without


discrimination.
Building competitive value through mutual trust and mutual responsibility
between the Indus Team and the Company.

Becoming a Good Corporate Citizen


Following ethical business practices and the laws of the land.
Engaging in the philanthropic and social activities that contribute to the
enrichment of Pakistani society, especially in the areas that are strategic to both
societal and business needs e.g. Road Safety, Technical Education, Environment
Protection, etc.
Enhancing corporate values and respect while achieving stable and long-term
growth for the benefit of our shareholders.

10

Stockholder Information:
Factory / Registered Office
Plot No. N.W.Z/1/P-1, Port Qasim Authority,
Bin Qasim, Karachi.
PABX: 92-21-34720041-48
Fax: 92-21-34720056

Share Registrar:
Noble Computer Services (Private) Limited
First Floor, House of Habib Building
(Siddiqsons Tower), 3-Jinnah C. H. Society,
Main Shahrah-e-Faisal, Karachi 75350.
PABX: 92-21-34325482-87
Fax: 92-21-34325442

Ownership:
On June 30, 2011, there were 3,497 shareholders on record of the Companys ordinary
shares.

Listing on stock exchanges:


Indus Motor Company Limited equity shares are listed on Karachi, Lahore and Islamabad
Stock Exchanges.

Stock Code:
The stock code for dealers in equity shares of Indus Motor Company Limited at KSE, LSE
and ISE is INDU.

11

12

Financial Statement Analysis:


This section will include the following to analyze the Financial Statements of Indus Motor
Company Limited:

Vertical Analysis

Horizontal Analysis

Ratio Analysis

13

Profit and Loss Account

14

Profit and Loss Account:

Net sales
Cost of sales
Gross profit
Distribution
costs
Administrative
expenses
Other operating
expenses
Other operating
income
Finance cost
Profit before
taxation
Taxation
Profit after
taxation

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

39,061,226
(34,620,632)
4,440,594

41,423,843
(37,575,356)
3,848,487

37,864,604
(35,540,418)
2,324,186

60,093,139
(55,382,306)
4,710,833

61,702,677
(57,613,542)
4,089,135

(509,986)

(487,373)

(469,985)

(468,496)

(690,130)

(265,302)
(775,288)
3,665,306

(297,284)
(784,657)
3,063,830

(352,249)
(822,234)
1,501,952

(381,575)
(850,071)
3,860,762

(462,517)
(1,152,647)
2,936,488

(348,430)
3,316,876

(306,193)
2,757,637

(156,479)
1,345,473

(416,106)
3,444,656

(355,796)
2,580,692

956,494
4,273,370
(43,889)

786,834
3,544,471
(2,760)

727,080
2,072,553
(26,540)

1,801,459
5,246,115
(3,576)

1,507,878
4,088,570
(77,115)

4,229,481
(1,483,780)

3,541,711
(1,250,866)

2,046,013
(660,911)

5,242,539
(1,799,136)

4,011,455
(1,268,071)

2,745,701

2,290,845

1,385,102

3,443,403

2,743,384

15

Vertical Analysis (Profit and Loss Account):

Net sales
Cost of sales
Gross profit
Distribution
costs
Administrative
expenses
Other operating
expenses
Other operating
income
Finance cost
Profit before
taxation
Taxation
Profit after
taxation

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

100.00%
88.63%
11.37%

100.00%
90.71%
9.29%

100.00%
93.86%
6.14%

100.00%
92.16%
7.84%

100.00%
93.37%
6.63%

1.31%

1.18%

1.24%

0.78%

1.12%

0.68%
1.98%
9.38%

0.72%
1.89%
7.40%

0.93%
2.17%
3.97%

0.63%
1.41%
6.42%

0.75%
1.87%
4.76%

0.89%
8.49%

0.74%
6.66%

0.41%
3.55%

0.69%
5.73%

0.58%
4.18%

2.45%
10.94%
0.11%

1.90%
8.56%
0.01%

1.92%
5.47%
0.07%

3.00%
8.73%
0.01%

2.44%
6.63%
0.12%

10.83%
3.80%

8.55%
3.02%

5.40%
1.75%

8.72%
2.99%

6.50%
2.06%

7.03%

5.53%

3.66%

5.73%

4.45%

Interpretation:
The vertical analysis is used to measure the accounts in comparison with the other
businesses. In this profit and loss account the cost of sales contains the major portion of net
sales which is 88.63% in FY 2007, 90.71% in FY 2008, 93.86% in FY 2009, 92.16% in FY
2010 and 93.37% in FY 2011.

16

Horizontal Analysis (Profit and Loss Account):

Net sales
Cost of sales
Gross profit
Distribution
costs
Administrative
expenses
Other operating
expenses
Other operating
income
Finance cost
Profit before
taxation
Taxation
Profit after
taxation

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

100.00%
100.00%
100.00%

106.05%
108.53%
86.67%

96.94%
102.66%
52.34%

153.84%
159.97%
106.09%

157.96%
166.41%
92.09%

100.00%

95.57%

92.16%

91.86%

135.32%

100.00%
100.00%
100.00%

112.05%
101.21%
83.59%

132.77%
106.06%
40.98%

143.83%
109.65%
105.33%

174.34%
148.67%
80.12%

100.00%
100.00%

87.88%
83.14%

44.91%
40.56%

119.42%
103.85%

102.11%
77.80%

100.00%
100.00%
100.00%

82.26%
82.94%
6.29%

76.02%
48.50%
60.47%

188.34%
122.76%
8.15%

157.65%
95.68%
175.70%

100.00%
100.00%

83.74%
84.30%

48.38%
44.54%

123.95%
121.25%

94.85%
85.46%

100.00%

83.43%

50.45%

125.41%

99.92%

Interpretation:
In the horizontal analysis, the items in a financial statement are measured over a certain
period of time. As compared to the FY 2007 the net sales in FY 2008 has increased by
6.05%, in FY 2009 it has decreased by 3.06%, in FY 2010 it has increased exponentially by
53.84% and same is the case in FY 2011 the net sales have increased by 57.96%. Going on
to the cost of sales, it has increased by 66.41% in FY 2011 which is the most increase in this
time series. Same is the case in distribution costs the percentage has increased by 35.32%
as compared to FY 2007 in FY 2011. The operating expenses shows an increasing trend till
FY 2010 but falls in FY 2011 from 88.34% to 57.65%. The change is a decrease by 30.69%.

17

Balance Sheet

18

Balance Sheet:

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

Assets
Non-current assets
Fixed assets
Long-term loans and
advances
Long-term deposits
Current assets
Stores and spares
Stock-in-trade
Trade debts
Current maturity of
finance under musharika
arrangements
Loans and advances
Short-term prepayments
and trade deposits
Accrued mark-up
Other receivables
Investments - at fair value
through profit and loss
Taxation-net
Cash and bank balances
Total Assets

2,093,852

4,033,762

3,934,473

3,324,333

4,225,710

28,487
6,629
2,128,968

42,341
7,222
4,083,325

28,509
7,222
3,970,204

15,570
7,122
3,347,025

11,949
9,222
4,246,881

227,191
2,859,951
665,647

232,142
2,637,629
1,332,832

128,483
4,088,858
1,736,631

111,567
5,198,367
1,613,247

189,755
5,690,052
1,356,068

3,710
401,918

0
737,372

0
894,459

0
839,819

0
926,174

47,523
132,634
605,725

23,148
35,012
74,360

16,876
50,944
67,902

18,778
57,254
196,241

18,900
52,586
149,533

0
48,520
8,543,263
13,536,082

54,171
209,533
4,328,585
9,664,784

0
0
9,731,166
16,715,319

0
0
15,755,980
23,791,253

4,993,464
399,006
8,812,199
22,587,737

15,665,050

13,748,109

20,685,523

27,138,278

26,834,618

19

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

Liabilities and Equity


Equity
Share capital
Authorized capital
100,000,000
(2006:100,000,000)
Ordinary shares of Rs 10
each

Issued, subscribed and


paid-up capital
Reserves

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

786,000
7,257,975
8,043,975

786,000
8,650,340
9,436,340

786,000
9,510,973
10,296,973

786,000
11,801,615
12,587,615

786,000
13,333,648
14,119,648

210,149
210,149

532,138
532,138

503,700
503,700

325,797
325,797

454,012
454,012

2,892,017

2,793,554

3,942,988

5,905,062

5,740,869

4,514,480
715

985,972
105

5,926,529
673

8,076,281
944

6,519,669
420

3,714
0
7,410,926

0
0
3,779,631

0
14,660
9,884,850

0
242,579
14,224,866

0
0
12,260,958

15,665,050

13,748,109

20,685,523

27,138,278

26,834,618

Liabilities
Non-current liabilities
Deferred taxation
Current liabilities
Trade and other payables
Advances from customers
and dealers
Accrued mark-up
Short-term running
finances
Current portion of
liabilities against assets
subject to finance lease
Taxation - net
Contingencies and
commitments
Total equity and
liabilities

20

Vertical Analysis (Balance Sheet):


2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

Assets
Non-current assets
Fixed assets
Long-term loans and
advances
Long-term deposits
Current assets
Stores and spares
Stock-in-trade
Trade debts
Current maturity of
finance under musharika
arrangements
Loans and advances
Short-term prepayments
and trade deposits
Accrued mark-up
Other receivables
Investments - at fair value
through profit and loss
Taxation-net
Cash and bank balances
Total Assets

13.37%

29.34%

19.02%

12.25%

15.75%

0.18%
0.04%
13.59%

0.31%
0.05%
29.70%

0.14%
0.03%
19.19%

0.06%
0.03%
12.33%

0.04%
0.03%
15.83%

1.45%
18.26%
4.25%

1.69%
19.19%
9.69%

0.62%
19.77%
8.40%

0.41%
19.16%
5.94%

0.71%
21.20%
5.05%

0.02%
2.57%

0.00%
5.36%

0.00%
4.32%

0.00%
3.09%

0.00%
3.45%

0.30%
0.85%
3.87%

0.17%
0.25%
0.54%

0.08%
0.25%
0.33%

0.07%
0.21%
0.72%

0.07%
0.20%
0.56%

0.00%
0.31%
54.54%
86.41%

0.39%
1.52%
31.48%
70.30%

0.00%
0.00%
47.04%
80.81%

0.00%
0.00%
58.06%
87.67%

18.61%
1.49%
32.84%
84.17%

100.00%

100.00%

100.00%

100.00%

100.00%

21

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

Liabilities and Equity


Equity
Share capital
Authorized capital
100,000,000
(2006:100,000,000)
Ordinary shares of Rs 10
each

Issued, subscribed and


paid-up capital
Reserves

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

5.02%
46.33%
51.35%

5.72%
62.92%
68.64%

3.80%
45.98%
49.78%

2.90%
43.49%
46.38%

2.93%
49.69%
52.62%

1.34%
1.34%

3.87%
3.87%

2.44%
2.44%

1.20%
1.20%

1.69%
1.69%

18.46%

20.32%

19.06%

21.76%

21.39%

28.82%
0.00%

7.17%
0.00%

28.65%
0.00%

29.76%
0.00%

24.30%
0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.02%
0.00%
47.31%

0.00%
0.00%
27.49%

0.00%
0.07%
47.79%

0.00%
0.89%
52.42%

0.00%
0.00%
45.69%

100.00%

100.00%

100.00%

100.00%

100.00%

Liabilities
Non-current liabilities
Deferred taxation
Current liabilities
Trade and other payables
Advances from customers
and dealers
Accrued mark-up
Short-term running
finances
Current portion of
liabilities against assets
subject to finance lease
Taxation - net
Contingencies and
commitments
Total equity and
liabilities

22

Horizontal Analysis (Balance Sheet):


2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

Assets
Non-current assets
Fixed assets
Long-term loans and
advances
Long-term deposits
Current assets
Stores and spares
Stock-in-trade
Trade debts
Current maturity of
finance under musharika
arrangements
Loans and advances
Short-term prepayments
and trade deposits
Accrued mark-up
Other receivables
Investments - at fair value
through profit and loss
Taxation-net
Cash and bank balances
Total Assets

100.00%

192.65%

187.91%

158.77%

201.82%

100.00%
100.00%
100.00%

148.63%
108.95%
191.80%

100.08%
108.95%
186.48%

54.66%
107.44%
157.21%

41.95%
139.12%
199.48%

100.00%
100.00%
100.00%

102.18%
92.23%
200.23%

56.55%
142.97%
260.89%

49.11%
181.76%
242.36%

83.52%
198.96%
203.72%

100.00%
100.00%

0.00%
183.46%

0.00%
222.55%

0.00%
208.95%

0.00%
230.44%

100.00%
100.00%
100.00%

48.71%
26.40%
12.28%

35.51%
38.41%
11.21%

39.51%
43.17%
32.40%

39.77%
39.65%
24.69%

100.00%
100.00%
100.00%

431.85%
50.67%
71.40%

0.00%
113.90%
123.49%

0.00%
184.43%
175.76%

822.35%
103.15%
166.87%

100.00%

87.76%

132.05%

173.24%

171.30%

23

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

Liabilities and Equity


Equity
Share capital
Authorized capital
100,000,000
(2006:100,000,000)
Ordinary shares of Rs 10
each

Issued, subscribed and


paid-up capital
Reserves

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

100.00%
100.00%
100.00%

100.00%
119.18%
117.31%

100.00%
131.04%
128.01%

100.00%
162.60%
156.49%

100.00%
183.71%
175.53%

100.00%
100.00%

253.22%
253.22%

239.69%
239.69%

155.03%
155.03%

216.04%
216.04%

100.00%

96.60%

136.34%

204.18%

198.51%

100.00%
100.00%

21.84%
14.69%

131.28%
94.13%

178.90%
132.03%

144.42%
58.74%

100.00%

0.00%

0.00%

0.00%

0.00%

100.00%

51.00%

133.38%

191.94%

165.44%

100.00%

87.76%

132.05%

173.24%

171.30%

Liabilities
Non-current liabilities
Deferred taxation
Current liabilities
Trade and other payables
Advances from customers
and dealers
Accrued mark-up
Short-term running
finances
Current portion of
liabilities against assets
subject to finance lease
Taxation - net
Contingencies and
commitments
Total equity and
liabilities

24

Interpretation:
Vertical Analysis of Balance Sheet:
The current assets are greater in respective financial years which are 86.41% in FY 2007,
70.30% in FY 2008, 80.81% in FY 2009, 87.67% in FY 2010 and 84.17% in FY 2011. The
major portion of current assets is contained by cash and bank balances which drops in FY
2008 to 31.48% and in FY 2011 to 32.84%. The second major portion of current assets is
contained by stock-in-trade which shows a positive trend in a time series. The non-current
assets have increased in FY 2008.
In the liabilities and equity portion the vertical analysis shows that the major portion is the
equity and the current liabilities. In equity the reserves shows the higher percentage in a
group. Whereas in current liabilities; trade and other payables and advances from
customers and dealers shows the highest percentage.
Horizontal Analysis of Balance Sheet:
The horizontal analysis of the balance sheet shows that the fixed assets shows an
increasing trend but falls in FY 2010. Long-term loans and advances show a decreasing
trend but increases by 48.63% in FY 2008. The short term loans and advances show an
increasing trend. In FY 2009 and FY 2010 the stores and spares have decreased.
In the liabilities and equity portion the reserves shows increasing trend. It has increased by
19.18% in FY 2008, 31.04% in FY 2009, 62.60% in FY 2010 and 83.71% in FY 2011. The
deferred taxation has increased exponentially in FY 2008 by 153.22% and decreased in FY
2009 from 239.69% to 155.03% in FY 2010. The total liabilities and equity has decreased
by 12.24% in FY 2008 but shows increasing trend afterwards.

25

Cash Flow Statement

26

Cash Flow Statement:

Cash flow from operating activities


Cash generatated from operations
Interest paid
Workers profit participation fund
paid
Workers welfare fund paid
Interest received
Income tax paid
Long-term loans - net
Long-term deposits
Net cash flow from operating
activities
Cash flow from investing activities
Fixed capital expenditure
Proceeds from disposal of fixed assets
Investment made in listed mutual
fund
Proceeds from redemption of
investment in listed mutual fund
Receipts from finance under
musharika arrangements
Purchase of market treasury bills
Proceeds from redemption of market
treasury bills
Net cash flow from investing
activities
Cash flow fom financing activities
Repayments of obligation against
assets subject to finance lease
Dividend paid
Net cash flow from financing
activities
Net cash and cash equivalents
Cash and cash equivalents at the
beginning of the year
Cash and cash equivalents at the
end of the year

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

4,045,040
(43,411)

(125,517)
(3,427)

6,538,777
(8,267)

7,952,792
(77,415)

1,806,008
(25,443)

(227,390)
(67,655)
780,163
(1,634,104)
(27,468)
(1,448)

(201,390)
(78,562)
702,156
(1,089,890)
(13,854)
(593)

(105,538)
(50,069)
612,950
(465,156)
13,832
0

(282,674)
(37,587)
1,605,244
(1,749,120)
12,939
100

(205,836)
(110,469)
1,017,491
(1,781,441)
3,621
(2,100)

2,823,727

(811,077)

6,536,529

7,424,279

701,831

(805,259)
46,989

(2,422,406)
8,952

(721,823)
42,806

(270,252)
19,864

(1,877,040)
15,548

(25,000)

(50,000)

(1,490,000)

(7,059,000)

26,313

55,922

1,515,186

4,372,743

6,570
0

3,849
0

0
0

0
0

0
(7,048,403)

5,124,596

(750,387)

(2,459,605)

(623,095)

(225,202)

(6,471,556)

(6,413)
(939,844)

(3,878)
(940,118)

0
(510,853)

0
(1,174,263)

0
(1,174,056)

(946,257)

(943,996)

(510,853)

(1,174,263)

(1,174,056)

1,127,083

(4,214,678)

5,402,581

6,024,814

(6,943,781)

7,416,180

8,543,263

4,328,585

9,731,166

15,755,980

8,543,263

4,328,585

9,731,166

15,755,980

8,812,199

27

Vertical Analysis (Cash Flow Statement):

Cash flow from operating activities


Cash generatated from operations
Interest paid
Workers profit participation fund
paid
Workers welfare fund paid
Interest received
Income tax paid
Long-term loans - net
Long-term deposits
Net cash flow from operating
activities
Cash flow from investing activities
Fixed capital expenditure
Proceeds from disposal of fixed assets
Investment made in listed mutual
fund
Proceeds from redemption of
investment in listed mutual fund
Receipts from finance under
musharika arrangements
Purchase of market treasury bills
Proceeds from redemption of market
treasury bills
Net cash flow from investing
activities
Cash flow fom financing activities
Repayments of obligation against
assets subject to finance lease
Dividend paid
Net cash flow from financing
activities
Net cash and cash equivalents
Cash and cash equivalents at the
beginning of the year
Cash and cash equivalents at the
end of the year

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

47.35%
-0.51%

-2.90%
-0.08%

67.19%
-0.08%

50.47%
-0.49%

20.49%
-0.29%

-2.66%
-0.79%
9.13%
-19.13%
-0.32%
-0.02%

-4.65%
-1.81%
16.22%
-25.18%
-0.32%
-0.01%

-1.08%
-0.51%
6.30%
-4.78%
0.14%
0.00%

-1.79%
-0.24%
10.19%
-11.10%
0.08%
0.00%

-2.34%
-1.25%
11.55%
-20.22%
0.04%
-0.02%

33.05%

-18.74%

67.17%

47.12%

7.96%

-9.43%
0.55%

-55.96%
0.21%

-7.42%
0.44%

-1.72%
0.13%

-21.30%
0.18%

-0.29%

-1.16%

0.00%

-9.46%

-80.10%

0.31%

0.00%

0.57%

9.62%

49.62%

0.08%
0.00%

0.09%
0.00%

0.00%
0.00%

0.00%
0.00%

0.00%
-79.98%

0.00%

0.00%

0.00%

0.00%

58.15%

-8.78%

-56.82%

-6.40%

-1.43%

-73.44%

-0.08%
-11.00%

-0.09%
-21.72%

0.00%
-5.25%

0.00%
-7.45%

0.00%
-13.32%

-11.08%

-21.81%

-5.25%

-7.45%

-13.32%

13.19%

-97.37%

55.52%

38.24%

-78.80%

86.81%

197.37%

44.48%

61.76%

178.80%

100.00%

100.00%

100.00%

100.00%

100.00%

28

Horizontal Analysis (Cash Flow Statement):

Cash flow from operating activities


Cash generatated from operations
Interest paid
Workers profit participation fund
paid
Workers welfare fund paid
Interest received
Income tax paid
Long-term loans - net
Long-term deposits
Net cash flow from operating
activities
Cash flow from investing activities
Fixed capital expenditure
Proceeds from disposal of fixed assets
Investment made in listed mutual
fund
Proceeds from redemption of
investment in listed mutual fund
Receipts from finance under
musharika arrangements
Purchase of market treasury bills
Proceeds from redemption of market
treasury bills
Net cash flow from investing
activities
Cash flow fom financing activities
Repayments of obligation against
assets subject to finance lease
Dividend paid
Net cash flow from financing
activities
Net cash and cash equivalents
Cash and cash equivalents at the
beginning of the year
Cash and cash equivalents at the
end of the year

2007
Rs in 000

2008
Rs in 000

2009
Rs in 000

2010
Rs in 000

2011
Rs in 000

100.00%
100.00%

-3.10%
7.89%

161.65%
19.04%

196.61%
178.33%

44.65%
58.61%

100.00%
100.00%
100.00%
100.00%
100.00%
100.00%

88.57%
116.12%
90.00%
66.70%
50.44%
40.95%

46.41%
74.01%
78.57%
28.47%
-50.36%
0.00%

124.31%
55.56%
205.76%
107.04%
-47.11%
-6.91%

90.52%
163.28%
130.42%
109.02%
-13.18%
145.03%

100.00%

-28.72%

231.49%

262.92%

24.85%

100.00%
100.00%

300.82%
19.05%

89.64%
91.10%

33.56%
42.27%

233.10%
33.09%

100.00%

200.00%

0.00%

5960.00%

28236.00%

100.00%

0.00%

212.53%

5758.32%

16618.18%

100.00%

58.58%

0.00%

0.00%

0.00%

100.00%

327.78%

83.04%

30.01%

862.43%

100.00%
100.00%

60.47%
100.03%

0.00%
54.36%

0.00%
124.94%

0.00%
124.92%

100.00%

99.76%

53.99%

124.10%

124.07%

100.00%

-373.95%

479.34%

534.55%

-616.08%

100.00%

115.20%

58.37%

131.22%

212.45%

100.00%

50.67%

113.90%

184.43%

103.15%

29

Ratio Analysis

30

Ratio Analysis:
The ratio analysis of Indus Motor Company Limited will include the following:

Turnover ratios

Liquidity ratios

Solvency ratios

Profitability ratios (with reference to investment)

Profitability ratios (with reference to sales)

31

Turnover ratios:
1. Inventory turnover ratio:

Formula =

2006
Inventory
turnover ratio
Cost of goods sold
Inventory

31088906
3959316

2007

2008

2009

2010

2011

10.15

13.67

10.57

11.93

10.58

34620632
2,859,951

37575356
2,637,629

35540418
4,088,858

55382306
5,198,367

57613542
5,690,052

Inventory turnover ratio


16
14
12
10
8

Inventory turnover
ratio

6
4
2
0
2006

2007

2008

2009

2010

2011

Interpretation:
It measures the number of times the inventory has been used or sold in a financial year. So,
in FY 2007 the inventory has been used 10.15 times which increases by 3.52 times in FY
2008 w.r.t FY 2007. Then it decreases by 3.1 times in FY 2009.

32

2. Average of inventory on hand:

Formula =

2007
35.96

Avg of inventory on hand

2008
26.70

2009
34.53

2010
30.60

2011
34.50

Avg of inventory on hand


40.00
35.00
30.00
25.00
20.00

Avg of inventory on
hand

15.00
10.00
5.00
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
This ratio tells us that how long it will take to convert the inventory into sales. The
calculated results show that in FY 2007 it takes 36 days to convert its inventory into
sales. Whereas, in FY 2008 it takes 27 days, in FY 2009 it takes 25 days, in FY 2010 it
takes 31 days and in FY 2011 it takes 35 days approximately.

33

3. Debtor turnover ratio:

Formula =

2006
Debtor turnover
ratio
Net Sales
Debtors

35,236,53
5
738,281

2007

2008

2009

2010

2011

55.65

41.46

24.67

35.88

41.56

39,061,226

41,423,843

37,864,604

60,093,139

61,702,677

665,647

1,332,832

1,736,631

1,613,247

1,356,068

Debtor turnover ratio


60.00
50.00
40.00
30.00

Debtor turnover ratio

20.00
10.00
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
This ratio shows that how many times the debts have been collected in a year. In FY
2007 it is 55.65 times, in FY 2008 it is 41.46 times, in FY 2009 it is 24.67 times, in FY
2010 it takes 35.88 times and in FY 2011 it takes 41.56 times to collect back the debts
from the account receivables.

34

4. Average collection period:

Formula =

2007
6.56
55.65

Avg collection period


Debtor turnover ratio

2008
8.80
41.46

2009
14.80
24.67

2010
10.17
35.88

2011
8.78
41.56

Avg collection period


16.00
14.00
12.00
10.00
8.00

Avg collection period

6.00
4.00
2.00
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
The average collection period tells us that in a year after how many days the debt the
collected from the account receivables. The lesser the number the days the better it is. In FY
2007 it takes 7 days, in FY 2008 it takes 9 days, in FY 2009 it takes 15 days, in FY 2010 it
takes 10 days and in FY 2011 it takes 9 days to collect the money from the debtors.

35

5. Creditor Turnover Ratio:

Formula =

2006
Creditor
turnover ratio
Purchases
Creditors

26,923,813
2599911

2007

2008

2009

2010

2011

9.95

2.30

1.07

9.65

8.71

27,327,660
2,892,017

6,541,304
2,793,554

3,597,898
3,942,988

47,500,217
5,905,062

50,744,050
5,740,869

Creditor turnover ratio


12.00
10.00
8.00
6.00

Creditor turnover ratio

4.00
2.00
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
This ratio tells us that how many times the money is paid to the creditors in a financial
year. The lower the times of payment the better it is. In FY 2007 it pays 10 times, in FY
2008 it pays 2.3 times, in FY 2009 it pays 1.07 times, in FY 2010 it pays 10 times and in
FY 2011 it pays money 8.71 times to its creditors in a financial year.

36

6. Average Payment Period:

Formula =

2006

2007

Average
payment period
Creditor
turnover ratio

2008

2009

2010

2011

36.68

158.70

341.12

37.82

41.91

9.95

2.30

1.07

9.65

8.71

Average payment period


400.00
350.00
300.00
250.00
200.00

Average payment
period

150.00
100.00
50.00
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
This ratio tells us that after how many days do the company pays the money to its
creditors. The greater the number of days the better it is. In FY 2007 the company paid
within 37 days, in FY 2008 it paid after 158 days, in FY 2009 it paid after 341 days, in FY
2010 it paid after 38 days and in the FY 2011 it paid within 42 days.

37

7. Fixed Assets Turnover Ratio:

Formula =

Fixed Asset
Turnover Ratio
Net Sales
Fixed Assets

2006

2007

2008

2009

2010

2011

35,236,535
1726811

20.26
39,061,226
2,128,968

13.34
41,423,843
4,083,325

9.40
37,864,604
3,970,204

16.43
60,093,139
3,347,025

16.25
61,702,677
4,246,881

Fixed Asset Turnover Ratio


25.00
20.00
15.00
Fixed Asset Turnover
Ratio

10.00
5.00
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
This ratio tells us the effectiveness of company use of fixed assets to generate sales. It ratio
shows a decrease in FY 2008 - FY 2009 which is 13.34 and 9.40 respectively. But in other
financial years the total assets are being used effectively.

38

8. Total Asset Turnover Ratio:

Formula =

Total Asset
Turnover Ratio
Net Sales
Total Assets

2006

2007

2008

2009

2010

2011

35,236,535
15822468

2.48
39,061,226
15,665,050

2.82
41,423,843
13,748,109

2.20
37,864,604
20,685,523

2.51
60,093,139
27,138,278

2.29
61,702,677
26,834,618

Total Asset Turnover Ratio


3.00
2.50
2.00
1.50

Total Asset Turnover


Ratio

1.00
0.50
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
This ratio tells us the effectiveness of company use of total assets to generate sales. It ratio
shows a decrease in FY 2009 and FY 2011 which are 2.20 and 2.29 respectively. But in
other financial years the total assets are being used effectively.

39

Liquidity Ratios:
1. Current Ratio:

Formula =

2006
Current Ratio
Current Assets
Current Liabilities

14,095,657
9444554

2007
1.83
13,536,082
7,410,926

2008
2.56
9,664,784
3,779,631

2009
1.69
16,715,319
9,884,850

2010
1.67
23,791,253
14,224,866

2011
1.84
22,587,737
12,260,958

Current Ratio
3.00
2.50
2.00
1.50

Current Ratio

1.00
0.50
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
The current ratio determines that whether the firm has enough short term resources or in
other words does the company has enough resources to pay up its debts within a period of
one year. The ratio greater than 1 shows that the company has the resources to pay off its
debts in one financial year. In FY 2008 it was 2.56 that means the company had 2.56 times
the assets as compared to its liabilities.

40

2. Quick Ratio:

Formula =

2006
Quick Ratio
Quick Assets
Current
Liabilities
Current Assets
Stores and
Spares
Stock in trade

9,910,172

2007
1.41
10,448,940

2008
1.80
6,795,013

2009
1.26
12,497,978

2010
1.30
18,481,319

2011
1.36
16,707,930

9444554

7,410,926

3,779,631

9,884,850

14,224,866

12,260,958

14,095,657

13,536,082

9,664,784

16,715,319

23,791,253

22,587,737

226,169

227,191

232,142

128,483

111,567

189,755

3,959,316

2,859,951

2,637,629

4,088,858

5,198,367

5,690,052

Quick Ratio
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00

Quick Ratio

2006

2007

2008

2009

2010

2011

Interpretation:
The acid test or quick ratio determines that if the company has enough short term most
liquid assets to cover its immediate liabilities. From the results the company in the whole
times series has the capability to pay off its immediate short term debts.

41

3. Cash Ratio:

Formula =

Cash Ratio
Cash and Bank
Balances
Current
Liabilities

2006

2007
1.15

2008
1.15

2009
0.98

2010
1.11

2011
0.72

7,416,180

8,543,263

4,328,585

9,731,166

15,755,980

8,812,199

9444554

7,410,926

3,779,631

9,884,850

14,224,866

12,260,958

Cash Ratio
1.40
1.20
1.00
0.80
Cash Ratio

0.60
0.40
0.20
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
The cash ratio shows that whether the company is using its cash to its best advantage or
not. The greater value of cash ratio means that the company Is not using its cash at its best.
If we look at the results the company is not using its cash at its best in FYs 2007, 2008 and
2010.

42

4. Cash Conversion Cycle:


Formula =

Cash conversion cycle


Avg of inventory on
hand
Avg collection period
Average payment period

2007
5.84

2008
-123.2

2009
-291.79

2010
2.95

2011
1.37

35.96

26.7

34.53

30.6

34.5

6.56
36.68

8.8
158.7

14.8
341.12

10.17
37.82

8.78
41.91

Cash conversion cycle


50
0
-50

2006

2007

2008

2009

2010

2011

-100
-150

Cash conversion cycle

-200
-250
-300
-350

Interpretation:
The cash conversion cycle tells us that how quickly a company can convert its products into
cash through sales. The shorter cycle means the less capital is tied up in the business. The
negative values in FY 2008 and 2009 shows that the company has been holding cash from
the creditors and have not paid for a long time in a period of 1 year. These results have
already been shown in average payment period.

43

Solvency Ratios:
1. Debt to Asset Ratio:
Formula =

Debt to Asset Ratio


Total Debt
Total non-current
liabilities
Total current liabilities
Total Asset

2007
0.49
7,621,075

2008
0.31
4,311,769

2009
0.50
10,388,550

2010
0.54
14,550,663

2011
0.47
12,714,970

210,149

532,138

503,700

325,797

454,012

7,410,926
15,665,050

3,779,631
13,748,109

9,884,850
20,685,523

14,224,866
27,138,278

12,260,958
26,834,618

Debt to Asset Ratio


0.60
0.50
0.40
0.30

Debt to Asset Ratio

0.20
0.10
0.00
2007

2008

2009

2010

2011

Interpretation:
This ratio shows that how much the assets are financed through debt. The lower value of
this ratio means that the greater portion of assets is financed through equity rather than
debt. From the results shown above we can say that in a time series the major portion of
assets is financed through equity.

44

2. Debt to Capital Ratio:

Formula =

Debt to Capital Ratio


Total Debt
Total non-current
liabilities
Total current liabilities
Total Debt + Equity

2007
0.49
7,621,075

2008
0.31
4,311,769

2009
0.50
10,388,550

2010
0.54
14,550,663

2011
0.47
12,714,970

210,149

532,138

503,700

325,797

454,012

7,410,926
15,665,050

3,779,631
13,748,109

9,884,850
20,685,523

14,224,866
27,138,278

12,260,958
26,834,618

Debt to Capital Ratio


0.60
0.50
0.40
0.30

Debt to Capital Ratio

0.20
0.10
0.00
2007

2008

2009

2010

2011

Interpretation:
The ratio tells the users about how the company is financing its operations, along with
some insight into its financial strength. The lesser values from the results shows that the
company has more equity than its debt and is financially strong and that the company is
financing its operations more from its equity rather than debt.

45

3. Debt to Equity Ratio:

Formula =

Debt to Equity Ratio


Total Long term Debt
Total Equity

2007
0.03
210,149
8,043,975

2008
0.06
532,138
9,436,340

2009
0.05
503,700
10,296,973

2010
0.03
325,797
12,587,615

2011
0.03
454,012
14,119,648

Debt to Equity Ratio


0.06
0.05
0.04
0.03

Debt to Equity Ratio

0.02
0.01
0.00
2007

2008

2009

2010

2011

Interpretation:
Taking the long term debt in the debt position gives us an overview of how much long term
liabilities are financed by equity. From the results it shows a smaller portion is financed by
the equity.

46

4. Financial Leverage:

Formula =

2006
Financial
Leverage Ratio
Total Equity
Total Assets

6,257,879
15822468

2007

2008

2009

2010

2011

2.20

1.68

1.74

2.09

2.02

8,043,975
15,665,050

9,436,340
13,748,109

10,296,973
20,685,523

12,587,615
27,138,278

14,119,648
26,834,618

Financial Leverage
2.50
2.00
1.50
Financial Leverage

1.00
0.50
0.00
2006

2007

2008

2009

2010

2011

Interpretation:
The ratio tells us that how much portion of assets it covered by Rs. 1 of equity. The results
show that the company is highly leveraged. Companies that are highly leveraged may be at
risk of bankruptcy if they are unable to make payments on their debt; they may also be
unable to find new lenders in the future.

47

Profitability Ratios (with reference to Investment):


1. Return on assets:

Formula =

2007
17.53%
2,745,701
15,665,050

Return on assets
Net Income
Total Assets

x 100

2008
16.66%
2,290,845
13,748,109

2009
6.70%
1,385,102
20,685,523

2010
12.69%
3,443,403
27,138,278

2011
10.22%
2,743,384
26,834,618

Return on assets
20.00
18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00

Return on assets

2007

2008

2009

2010

2011

Interpretation:
The ratio return on assets shows us that how efficient management is at using its assets to
generate earnings. The FY 2009 result shows the misuse or inefficient use of assets to
generate income.

48

2. Return on equity:

Formula =

2007
34.13
2,745,701
8,043,975

Return on equity
Net Income
Total Equity

x 100

2008
24.28
2,290,845
9,436,340

2009
13.45
1,385,102
10,296,973

2010
27.36
3,443,403
12,587,615

2011
19.43
2,743,384
14,119,648

Return on equity
40.00
35.00
30.00
25.00
20.00

Return on equity

15.00
10.00
5.00
0.00
2007

2008

2009

2010

2011

Interpretation:
This ratio tells us that how much the profit Is generated by the company from the
shareholders contribution. It has decreased in FY 2009 and FY 2011. The ratio has fallen
because of the decline in the net income.

49

3. Operating return on asset:

Formula =

Operating return on
assets
Operating Income
Total Assets

4,072,777
15822468

x 100

2007

2008

2009

2010

2011

0.27

0.24

0.12

0.22

0.15

4,229,481
15,665,050

3,541,711
13,748,109

2,046,013
20,685,523

5,242,539
27,138,278

4,011,455
26,834,618

Operating return on assets


0.30
0.25
0.20
0.15

Operating return on
assets

0.10
0.05
0.00
2007

2008

2009

2010

2011

Interpretation:
This ratio tells us in a more descriptive way that how much assets have been used to
generate the profit from its operations rather than other income. It is lower in FY 2009 and
FY 2011 due to less operating income leading to misuse or inefficient use of assets.

50

Profitability Ratios (with reference to Sales):


1. Gross profit margin:

Formula =

Gross Profit
Margin
Gross Profit
Net Sales

x 100

2007

2008

2009

2010

2011

11.37%

9.29%

6.14%

7.84%

6.63%

4,440,594
39,061,226

3,848,487
41,423,843

2,324,186
37,864,604

4,710,833
60,093,139

4,089,135
61,702,677

Gross Profit Margin


12.00
10.00
8.00
6.00

Gross Profit Margin

4.00
2.00
0.00
2007

2008

2009

2010

2011

Interpretation:
The gross profit margin tells us the percentage of income left after accounting for the cost
of goods sold. The trend is falling in a time series; it tried to recover in FY 2010. It can be
the cause of economic conditions and inflation in Pakistan.

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2. Net profit margin:

Formula =

Net Profit Margin


Net Profit
Net Sales

2007
7.03
2,745,701
39,061,226

x 100

2008
5.53
2,290,845
41,423,843

2009
3.66
1,385,102
37,864,604

2010
5.73
3,443,403
60,093,139

2011
4.45
2,743,384
61,702,677

Net Profit Margin


8.00
7.00
6.00
5.00
4.00

Net Profit Margin

3.00
2.00
1.00
0.00
2007

2008

2009

2010

2011

Interpretation:
The net profit margin tells us that how much income has been earned in a percentage after
deducting the direct and indirect expenses or how much net revenue has been generated
from Rs. 1 of sales. The trend is falling in a time series; it tried to recover in FY 2010. It can
be the cause of economic conditions and inflation in Pakistan.

52

3. Pre-tax margin:

Formula =

Pre-tax Margin
Earning before
tax
Net Sales

x 100

2007
10.83%

2008
8.55%

2009
5.40%

2010
8.72%

2011
6.50%

4,229,481

3,541,711

2,046,013

5,242,539

4,011,455

39,061,226

41,423,843

37,864,604

60,093,139

61,702,677

Pre-tax Margin
12.00
10.00
8.00
6.00

Pre-tax Margin

4.00
2.00
0.00
2007

2008

2009

2010

2011

Interpretation:
This percentage ratio tells us that how much income have been earned from Rs. 1 of sales
without deducting the tax expenses. The trend is falling in a time series; it tried to recover
in FY 2010. It can be the cause of economic conditions and inflation in Pakistan. It goes to
8.72% in FY 2010 but decreased to 6.50% in FY 2011 which also shows that the either the
expenses has increased or the rupee has been depreciated.

53

Appendix

54

1. Financial Year 2005 2006


a) Balance Sheet:

55

b) Profit and Loss:

56

c) Cash Flow Statement:

57

2. Financial Year 2006 2007


a) Balance Sheet:

58

b) Profit and Loss:

59

c) Cash Flow Statement:

60

3. Financial Year 2007 2008


a) Balance Sheet:

61

b) Profit and Loss:

62

c) Cash Flow Statement:

63

4. Financial Year 2008 2009:


a) Balance Sheet:

64

b) Profit and Loss:

65

c) Cash Flow Statement:

66

5. Financial Year 2009 2010:


a) Balance Sheet:

67

b) Profit and Loss:

68

c) Cash Flow Statement:

69

6. Financial Year 2010 2011:


a) Balance Sheet:

70

b) Profit and Loss:

71

c) Cash Flow Statement:

72

References:

Indus Motor Company Limited Annual Report 2006


Indus Motor Company Limited Annual Report 2007
Indus Motor Company Limited Annual Report 2008
Indus Motor Company Limited Annual Report 2009
Indus Motor Company Limited Annual Report 2010
Indus Motor Company Limited Annual Report 2011
www.toyota-indus.com

73